Banks need to serve exporters better

EXIM MATTERS

My work involves extensive travel and interaction with several importers and exporters across the country. I come across many complaints about bankers regarding import-export transactions. Here are some of them.

Many importers say that though they clearly mention in their letter of credit (LC) application forms that all bank charges outside India are to the account of the beneficiary, banks debit their accounts for foreign bank charges without proper explanation.

Exporters tendering documents with similar instructions also say that they find indiscriminate debits in their accounts on account of foreign bank charges without any satisfactory explanation.

These charges are often quite exorbitant. Whenever bankers make mistakes in preparing or transmitting LC messages or bank-to-bank instructions regarding collection documents or remittances etc., they make their customers pay for such mistakes.

Bankers simply debit the charges from the account of their customers and do not respond very well to pleas for reversal of such payments. Banks collect unreasonable amounts towards out of pocket expenses. Although electronic communications cost very little, banks charge thousands of rupees as out-of-pocket expenses for transmitting even a short LC amendment.

Many banks abroad, especially in Africa and West Asia falsely allege discrepancies in documents, so that they can collect discrepancy charges. Some of them seem to have made discrepancy charges a source of regular revenue.

Instead of taking up the issue with such banks, Indian banks simply debit these unreasonable charges from the customers' accounts.

Bankers do not handle exceptions very well.

Most bankers manage routine well, but when something goes wrong they do not know what to do. Surprisingly, on this count, executives of foreign and private banks are not rated highly.

Standard of examination of documents is not uniform. Documents drawn under a letter of credit are quite acceptable to one banker but not to another. Even within a branch, two officers take different views on whether a document is in conformity with LC terms.

Bankers are reluctant to take up the cause of their customers with foreign banks and do not like it if their customers insist that they do so.

Charges too are not uniform. Big customers negotiate hard and pay lower charges but smaller, or unwary, exporters feel they are overcharged, especially by private and foreign banks.

Banks do not guide their customers on the quickest way to get their money from abroad. When inward remittances do not reach in time, the bankers plead helplessness.

Also, while issuing certificates for claiming incentives, banks consider the actual amount received""after deduction of foreign bank charges""and not the export proceeds realised.

In a competitive environment, it is not just the customers who choose their banks, the banks too choose whom they want to serve. I hear these complaints almost everywhere. Even those who have a good word for their bankers agree with these allegations.

There is enough scope for banks to ascertain the correct position, train their staff better, cultivate right attitudes and communicate better with their customers. The Reserve Bank of India can take a more pro-active role to find suitable measures that will help exporters.

tncr@sify.com